CMS LOGGING, INC VS.

CA
FACTS:
CMS is a forest concessionaire engaged in the logging business, while private respondent
DRACOR is engaged in the business of exporting and selling logs and lumber. CMS and
DRACOR entered into a contract of agency whereby the former appointed the latter as its
exclusive export and sales agent for all logs that the former may produce, for a period of five (5)
years. The contract of agency states:

It is expressly agreed that DRACOR shall handle exclusively all negotiations of all export
sales of SISON with the buyers and arrange the procurement and schedules of the vessel or
vessels for the shipment of SISON's logs in accordance with SISON's written requests, but
DRACOR shall not in any way be liable or responsible for any delay, default or failure of the
vessel or vessels to comply with the schedules agreed upon;

Because of said agency, CMS was able to sell through DRACOR 77 million logs in Japan. Later
on, CMS found out that DRACOR used Shinko Trading as its own agent in selling the logs to
Japan which they gained commission for the sales and thus was a violation of the exclusivity
agreement.

CMS claimed that this commission paid to Shinko was in violation of the agreement and that it is
entitled to this amount as part of the proceeds of the sale of the logs. When DRACOR received
5% commission, the commission received by Shinko is tantamount to double compensation.
Because of that, CMS sold the logs directly to Japan and not through DRACOR anymore.

CMS sued DRACOR for the commission received by Shinko and for moral and exemplary
damages. RTC dismissed the complaint as well as the CA finding no proof that Shinko received
the commission.

ISSUE:
Whether DRACOR was entitled to commissions for the sales made by CMS directly to Japan.

HELD:
No, DRACOR was not entitled to its commission from the sales made by CMS to Japanese
firms. The principal may revoke a contract of agency at will, and such revocation may be
express, or implied, and may be availed of even if the period fixed in the contract of agency as
not yet expired. As the principal has this absolute right to revoke the agency, the agent cannot
object thereto; neither may he claim damages arising from such revocation, unless it is shown
that such was done in order to evade the payment of agent's commission. CMS appointed
DRACOR as its agent for the sale of its logs to Japanese firms. Yet, during the existence of the
contract of agency, DRACOR admitted that CMS sold its logs directly to several Japanese firms.
This act constituted an implied revocation of the contract of agency under Article 1924 of the
Civil Code, which provides:

Art. 1924 — The agency is revoked if the principal directly manages

the business entrusted to the agent, dealing directly with third persons.

Since the contract of agency was revoked by CMS when it’s sold its logs to Japanese firms
without the intervention of DRACOR, the latter is no longer entitled to its commission from the
proceeds of such sale and is not entitled to retain whatever moneys it may have received as its
commission for said transactions. Neither would DRACOR be entitled to collect damages from
CMS, since damages are generally not awarded to the agent for the revocation of the agency,
and the case at bar is not one falling under the exception mentioned, which is to evade the
payment of the agent's commission.